COMMISSIONER OF INCOME TAX Vs. FERNANDEZ MRS T

JUDGEMENT

(1.) THIS is a reference made under S. 256(2) of the IT Act, 1961, by the Tribunal, Bombay Bench 'B', and the following four questions stand referred to us :

(2.) WE are concerned in this reference with a partnership styled as M/s Sylvester and Co. It was between the assessee, Mrs. Fernandez, her deceased husband and her son, and the firm was carrying on business since 1st October, 1947. On 23rd December, 1957, a fresh deed of partnership was executed in which the share of the assessee was 25per cent, that of her husband 25per cent and that of her son 50per cent. The assessee's husband died on 21st April, 1963. However, cls. 15 and 17(b) of the deed of partnership became relevant in the context of his death. Clause 15, which is set out in para. 2 of the statement of the case, inter alia, provided that the death of any partner shall not dissolve the partnership as to the other partners, but his assets were to be divided amongst his legal heirs and representatives. The remaining portions of the said clause and cl. 17(b) indicate the manner in which the needful was to be done.

(3.) THE assessee carried the matter in appeal to the AAC who allowed the same for the detailed reasons contained in para. 5 of his order. He seems to have accepted the assessee's contention that the relationship of husband and wife must exist at the time when the income accrues and that as the income accrued to the husband not on 21 st April, 1963, when he died, but on the making up of the accounts on 30th September, 1963, on which date the relationship of husband and wife had ceased to exist, S. 64(1) of the IT Act, 1961, did not apply. The Revenue carried the matter in further appeal before the Tribunal. The Tribunal found in favour of the assessee on several different grounds, and each of these aspects indicated in the order of the Tribunal stands reflected in the four questions referred to us.